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Be Prepared for the Rules to Change in the Middle of the Game

Mar 19, 2008
Many irresistible forces cause an unexpected impact because of a change in the rules of how businesses are allowed to operate. Since external rules are usually something over which you have limited ability to influence, the rules themselves can be irresistible forces.

The irresistible forces unleashed by the rules or their changing can be especially volatile because the rules may be changed again and again in the future. Governments, trade groups, accounting standards organizations, and testing companies are just a few of the rule-setting bodies in our society that can create or block the opportunity to make breakthrough gains.

How might business rules change in the middle of your game? The rule changes usually occur because someone has properly pointed out that the existing rules are creating or not preventing some result that is less than completely desirable.

For example, accountants may have a rule that permits people to take income before it should really be credited. This activity can potentially harm investors who misperceive how well the organizations are doing and thus pay too much for the business results being reported.

An example occurred with residential property developers around 1970. Prior to that time accounting rules allowed the developers to take the entire profit from the sale of undeveloped land whenever the purchaser made the deal, even if the mortgagor was the developer.

In reality, most of these purchasers just walked away from their mortgages in the future, and the profits from a completed sale at full price were never earned. Eventually, the accounting standards were changed to prohibit taking the profits until the developer-held mortgages were paid.

Some stocks of this sort of residential property developer plunged by over 90 percent in a short period of time, devastating their shareholders and the prospects for these companies to raise equity to continue and expand their operations. Yet the only change that occurred was to the accounting rules.

The economic performance of the units was going to be the same until the next time the developer needed equity capital. Changing the rules essentially wiped out most of this part of the industry for undeveloped residential land.

Many organizations that depend on one particular set of rules for their rapid success are inclined to forget this dependence and thus are blindsided when the rules change. Be sure that is not going to happen to you.

You can remain more successful by studying to see what rules have the most impact on your success. Then carefully monitor possible reasons why those changes might occur.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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